Chapter 13 lets you pay back some or all of your creditors, usually over three to five years. You must be an individual (corporations and LLCs can't file Chapter 13) who has less than $2,750,000 in debt to qualify for Chapter 13. (If you owe more than this, a Chapter 11 may be your best option.) In a Chapter 13, you keep everything you have--your home, your vehicles, money in the bank.
Chapter 13 stops a foreclosure and gives you time -- up to five years -- to catch up on the amount you're behind. It can stop wage garnishments, bank attachments, liens, and levies (even IRS tax levies). It also has a special provision that protects co-signers or people who have guaranteed your consumer debts from collections during your case.
A Chapter 13 starts when your petition is filed with the Court. Documents relating to income and expenses, debts, property (real estate as well as personal property—your “stuff”), and other financial disclosures must be prepared and filed.
The Automatic Stay Stops...
Foreclosures, Repossessions, Lawsuits, Garnishments...
The Automatic Stay that goes into effect once your Chapter 13 case is filed immediately stops most collection actions, including collection calls and letters, bills, foreclosures, lawsuits, garnishments, bank attachments, even IRS levies. There are things it doesn't stop, such as criminal cases and some child and spousal support actions. Under some circumstances the Automatic Stay may exist for only a short period of time.
The Chapter 13 Plan lets you bring most past-due payments current over time, usually three to five years.
About six weeks after the petition is filed, the trustee will hold the meeting of creditors. You will need to attend that meeting, but don’t worry—I will be there with you, and you will be completely prepared to avoid any surprises. It isn’t a test, and only very rarely do creditors show up. Most of the time, the meeting of creditors lasts less than five minutes, and we even send you a list of the common questions that are asked beforehand! Right now, all meetings are conducted by Zoom or telephone, so you don't even need to leave your home.
About a month after the meeting of creditors, is the Confirmation Hearing (although often we usually work matters out with the trustee to avoid your having to appear in Court). At the Confirmation Hearing, we ask the Court to approve your Chapter 13 Plan. If your Chapter 13 Plan is approved, so long as you make your monthly trustee payments, you're fine. If it isn't approved the first time, we submit an Amended Plan, and have a new Confirmation Hearing. Again, right now most Court hearings, including Confirmation Hearings, are conducted by Zoom.
Even pre-Covid, the vast majority of my Chapter 13 clients never saw the inside of courtroom (except for my DC clients, where the meeting of creditors was held in a small courtroom, without a judge).
A successful Chapter 13 bankruptcy involves filing a Plan and sticking to the Plan. Simple, right? Not necessarily, because the majority of Chapter 13 bankruptcy cases are filed without a lawyer or with a lawyer who believes that his or her involvement ends when the Plan is confirmed.
If you want a lawyer who doesn't want to be bothered with you once the Plan is confirmed, don't hire me. I have better things to do than to file Chapter 13 bankruptcy cases that won't work. When we work together you can be sure that your Chapter 13 Plan will be as effective as possible. If the Plan needs to be changed to make your case go through smoothly then I’ll personally make sure the issues are handled quickly and efficiently. After all, there are few things worse than filing a Chapter 13 bankruptcy and losing the attention of your lawyer!
It’s up to you to make your Plan a successful one, and it's up to me to help. You are required to begin making your plan payments within 30 days of the date the case is filed, even before the Meeting of Creditors or Confirmation Hearing. If there is a problem that prevents you from making Plan payments you need to let me know so that we can consider your options. Remember, a Chapter 13 Plan is a living entity–-if you lose your job, suffer a change in circumstances or just misjudge your ability to make payments, there are often things that we can do to make it work for you.